Balancing Your Personal and Business Finances

One of the things clients often ask me to speak about is budgeting and finances for both business and personal funds. So, here’s a peek into how we manage our finances and some tips for you to help you manage yours!

Brandon and I worked together in high school while listening to Dave Ramsey on cassette tape. As you can imagine, that had a profound impact on how we learned to handle our finances. We then worked our butts off to pay for Brandon’s last two years at a private university, while living as lean as we possibly could.

Post college we obviously began to earn more, as we were both able to focus on our careers. However, I realized pretty quickly that while more money does not actually cause more problems, but the mismanagement of money does.

Things were totally fine for us when we were still living lean, even though we had more money to spend. We didn’t really feel any financial pressure until we started to try and keep up with the Jones’s. That’s when things got a little more stressful and we decided to re-evaluate and do things a bit differently.

One thing that keeps us focused financially is that Brandon checks on our financials daily. He does this for both of our businesses. He tracks everything, including our personal finances, in one place.

Our business finances are broken down into specific revenue streams. We track the income for each revenue stream, along with the expenses for each revenue stream. This gives us our net income on a daily basis for each revenue stream in our business. (Net income = gross income-expenses)

We then take our net income and break it down further to use as our personal finances, after setting money aside for taxes and giving (we give from both the business net revenue and personal net revenue).

Each month the specific numbers for our personal finances are different, since our net income is different month to month. However, whatever we bring in for the month, we break into the following percentages:

10% for tithing

We believe in giving on a personal level, and also give 10% each month from our business finances. It is absolutely critical you begin this practice early on in your business. It will not be easier to give when you are making more money. So, start with 10% of whatever you are making, even if it is only $10!

10% for fun money

This helps alleviate any guilt that might come with spending. It also allows us to live within our means, while still enjoying our lives.

10% for investment

We invest mainly in IRA’s but do have some other investments.

10% long term savings for spending

This goes towards things like a down payment on a home, a new vehicle or some of the bigger purchases we know we will eventually want to make.

3% education for kids

This does not necessarily mean college funds since we are not certain our children will go the traditional college route. However, we do make an investment into a regular investment account that will go towards our children’s future, whatever that may look like.

10% necessities and discretionary spending

This is self-explanatory. This money goes towards the things we need to buy each month, and any discretionary purchases we want to make!

47% additional savings

The rest of the money we bring in each month goes towards savings.

We’ve learned that living simply to make intentional purchases later on is a less stressful way to live, instead of doing everything in our power to keep up with the Jones’s. We want to see our bottom line increase each month, not level out or decrease. This means we communicate regularly about our finances, check the numbers daily, and make intentional plans with every penny we bring in.

To check out the specific spreadsheet we use for our finances, hop on over to my Facebook page and watch the live video!